Professional Documents
Culture Documents
Construction Contracts
Construction Contracts
•CONTRACT
•CONTRACT TYPES
•CONSTRUCTION CONTRACTS & MANAGEMENT
•LIABILITY PERIOD
•PERFORMANCE BONDS
•CERTIFICATES & PAYMENTS
•BREACH
•ARBITRATION
•TERMINATION
-WHAT IS A CONTRACT?
Unstamped
as prescribed by Indian court/arbitrator
Stamp Act, 1899 • Directed back to get the
documents duly stamped by
paying stamp + penalty as per
signed stamp act.
No contract
sealed
• Correspondence exchange are
Only for public body taken account
delivered
PRIVATE & PUBLIC CONTRACTS
Private
•Misrepresentation
•Fraud
•Mistake
•Suitability
•Contractor offers to do a
particular work at a fixed sum
within a specified time as per
plans and detailed specification.
•Suitability:
•It is done when the scope and nature of the work can
be broadly define.
•Suitability:
•Work to be completed expeditiously & where unseen
difficulties are likely to occur.
Structures where cost of construction is immaterial.
Percentage to be paid to the contactor should not be
applied on the costs of the following:
PACKAGE CONTRACT
•Two or more related jobs, each of which could form a
separate contract are combined together in a single
contract.
•Civil +design, construction + maintenance + supply
NEGOTIATED CONTRACT
•Negotiation take place between the representative of
the owner and the main contractor for project cost
•Detail project specification is required
•Consultancy project of world bank
CONTINUING CONTRACT
•New or additional work is awarded to the contractor
on the basis of agreed terms and conditions of an
existing contract
• do not require re – tendering, save time and money
RUNNING CONTRACT
•Provide goods and services at specified intervals or
as an when required by owner.
•Contract price is not fixed . Only on supply or
delivery.
LUMP SUM CONTRACT ITEM RATE
MERIT MERIT
•Owner can decide whether to start •No detailed drawing at the time of
or shelve the project. allotting contract.
•Owner need not employ the staff to •Changes in drawing and quantities of
keep periodical accounts. individual items can be made as per
•Contractor can earn more profit by requirement within agreed limits.
in-depth planning and effective •The payment to the contractor is
management at site. made on the actual work done by him
at the agreed rates.
DEMERIT
•Before the contract is awarded , the DEMERIT
project has to be studied & the •Total cost of the work can only be known
complete contract to be prepareda upon completion.
•Unforeseen details of work are not •Owner may have financial difficulty at
final stage
specified—contractor claim high
•Additional staff is required.
amount. •The scope for additional saving with use
of inferior quality materials
LUMP SUM SCHEDULE CONTRACT COST + FIXED FEE CONTRACT
MERIT MERIT
•Additional staff is not required to •Actual cost is taken.
take detailed measurements of work •Contractor performs the work in
done for releasing payments to the the best interest of the owner-
contractor. good quality work
•The owner can know from the tenders •Work can be taken in hand before
as to what the project will cost him. detailed drawing
•Changes in design and methods of
DEMERIT construction can be done
•Before the contract is awarded the , •Work can be executed speedily
all the contract documents are
required to be completed in every DEMERIT
respect. •This form cannot be adopted in case
•The non-scheduled extra items arising of public bodies and government
out of changes made in the drawing department
and specification are often a source •The final cost of the work is not
of dispute. known in advance.
RISK ANALYSIS…
owner
risk
contractor risk
risk
risk
risk
Construct- • Execution of construction work as per the design and within the
ion stage agreed limits of cost, time and specified quality.
Contractor Sub
and contractors
contractor‘ Construction
Owner s support
+owner‘s manager's
team consultant
support
team Engineers
Designer
and
consultants
architects
Construction
consultants
manger
Sub
Owner +owner‘s contractors
support team Contractor and
Owner +owner‘s contractor‘s
support team support team Construction
manager's
contractor consultant
Sub
contractor
suppliers
ROLE OF AN OWNER
•Discuss Bid evaluation with the architect, so that the contractor for
the job is selected.
•Not to interfere with the progress of the work & not to issue orders
for extra work.
ROLE OF AN ARCHITECT
SUBCONTRACTOR SUPPLIER
Example: delivering bricks to site will create only simple obligations, whereas
a supply contract for air-conditioning equipment may create additional
obligations (operating instructions, maintenance, warranties etc.)
Timely delivery of the proper martial is the most important duty of a supplier.
VIRTUAL COMPLETION & DEFECTS LIABILITY PERIOD
Interim certificate
Penultimate certificate
Final certificate
• A statement of facts which show approximate value of work done or the
contract price of material delivered on site.
Interim
certificate • Payments made under these certificates are provisional and are subject to
adjustment and to readjustments at the end of the contract.
• Once certificate is issued, material cannot be removed.
• Statement of the fact which shows that the works given in the contract are
Certificate
complete to the satisfaction of the architect.
of visual
completion • This certificate fixes the date of commencement of defect liability period as
well as it fixes the last date of calculation of liquidated damages.
• This certificate is issued to collect the necessary fees from the contractor for
Penultimate which survey /engineer is bound.
certificate
• The certificate which shows the final satisfaction of the work on its completion
Final
and the amount due (if)
certificate
BREACH OF CONTRACT
When a party fails to perform one or more of the obligations imposed upon
him by the contract, breach of contract occurs, leading to its determination.
CONCURRENT DELAYS
Delays on the part of the employer as well as those on the part of the
contractor
ARBITRATION
The parties will mutually agree regarding the sharing of arbitration fees
and expenses
The arbitration award will be final and binding upon both parties.
TERMINATION OF AN AGREEMENT
If one of the party has failed in his duty he shall not give a notice of
termination